Injustice: Child Trust Funds

IanWaring

We found out the hard way that kids with a CTF in place are not allowed to transfer to a Junior ISA, which replaced CTFs in 2011. With no new customers, providers are offering poor interest rates and have started to ratchet up their management charges, which given the "can't move" restriction, means kids with CTFs in place are, in effect, in savings prison. That's millions of 2-10 year olds in the UK.

I have written to my MP to ask if the Govt could remove this restriction, given that the integrity of kids getting their money at age 18 would be maintained, and that there was no associated cost to be paid by the public purse. My MP (Ed Vaizey MP) agrees with us and has indicated he'll ask the Chancellor about this.

However, more the merrier. Two of my grandchildren now have Junior ISAs. Unfortunately, Charlie (age 8) is currently frozen out. We'd like to contribute to his future unhindered.

Biggles

You'll find several threads on this subject over the last couple of years.

I think there are various e-petitions etc that you can contribute to if you do a search.

grey_gym_sock

i agree that CTFs should be allowed to turn into junior ISAs, but you shouldn't let that put you off contributing to the grandchild who can't have a junior ISA. put it in a bare trust account instead. he'll still get it when he's 18, and probably won't pay any more tax than a junior ISA would.

the whole idea of tax-exempt accounts for children is a bit of a joke, as most of them don't have enough income to pay tax anyway. it can help for gifts from parents, as the income is taxed as the parent's income if it's over £100 per year. but not an issue for gifts from grandparents.

xylophone

https://docs.google.com/viewer?a=v&q=cache:ewF5eLfYtaYJ:www.parliament.uk/briefing-papers/SN06468.pdf+ctf+jisa&hl=en&gl=uk&pid=bl&srcid=ADGEESgWmOyi18fWsnOVHugcr1TUZ_xSz40d07EuBFhe5Mr7pwn8Ony6Ohy-CaPMrsc7p9tvhgy3uDe1WIFBUSUtidaWt_7Zxvrr64rpavMVr40rkrl5ViVmJGrYQiTq8VQvW4UheRaH&sig=AHIEtbTd4NqyEAOz56bQNfEP1tvJCbERhQ


News in the last budget http://www.moneysavingexpert.com/news/banking/2013/03/budget-2013-child-trust-funds-junior-isas

gadgetmind

IanWaring wrote: »

I have written to my MP to ask if the Govt could remove this restriction

Why waste your MP's time asking the government to change something that they have already changed?

This change happened in the latest budget and was widely reported in the TV, print and online media. I really don't know how you missed it TBH.

Reaper

gadgetmind wrote: »

This change happened in the latest budget

No, they only announced a consultation on the subject which will report back in the summer. After that hopefully they will go ahead and change it, but nothing is certain.

Biggles

IanWaring wrote: »

Unfortunately, Charlie (age 8) is currently frozen out. We'd like to contribute to his future unhindered.

As grey gym sock says, there is nothing preventing you (as a grandparent) from contributing. Taxation is really only an issue for parents who contribute, who may be taxed on interest over £100 in a year.

JohnnyJet

It all seems very unfair that just because a child is born between a certain date means that they are unable to have a JISA. The current CTF system is poor value compared to a JISA. Why waste money on a consultation when the answer seems obvious?

latecomer

We are in the same boat - cant understand why the government doens't just abolish CTFs and allow transfers to ISAs. That way everyone gets the same opportunities.

cloud_dog

Reaper wrote: »

No, they only announced a consultation on the subject which will report back in the summer. After that hopefully they will go ahead and change it, but nothing is certain.

Its PEPs/ISA all over again.

Why they cannot just announce that existing tax-friendly accounts will roll in to the new version is beyond me. It will happen its just annoying that there is the delay. Its not beyond the wit of man to think "ooh, what about the existing CTF, shouldn't that form part of the Junior ISA assessment before we introduce it"

Radiantsoul

grey_gym_sock wrote: »

the whole idea of tax-exempt accounts for children is a bit of a joke, as most of them don't have enough income to pay tax anyway. it can help for gifts from parents, as the income is taxed as the parent's income if it's over £100 per year. but not an issue for gifts from grandparents.

It does also convert to an ISA at 18 so there is a small advantage.
I think the idea was psychological, that an account would automatically be opened and a little bit added by the government to nudge people towards savings. The book Nudge was very influential for a few weeks a while back.